‘Creative destructionism’

Change is sometimes very hard to deal with, especially in the economy where it seems like we are constantly seeing some companies and jobs destroyed while new ones are created, says host Mary Walden. She asks her husband, N.C. State economist Mike Walden, “Is this a new phenomenon?”

Mike Walden: “It really isn’t, Mary. It may have speeded up, but it’s not a new phenomenon. In fact, a famous economist coined the term about 60 years ago ‘creative destructionism.’ In modern economies where people are free to move between types of employment, and businesses are free to start companies or tear down companies, you’re going to have constant change. You’re going to have some kind of products and services replacing other kinds of products and services.

“For example, we look at our country just recently to cite a couple of examples: We’ve had a computer replace the typewriter. We’ve had digital cameras replace film cameras. And what this means, for example, is that companies in the past that did well selling typewriters or making film and selling film cameras, they’re not doing well today. In fact Kodak is a prime example of that.

“And what this therefore means is that some people are going to lose their jobs if they work in those kinds of companies, but hopefully there are other kinds of jobs that open in other companies. And so, you have this constant shift in this, constant dynamic in modern economies. It does mean that, in general, economies make progress over time, but is a very bumpy ride, and it takes a lot of change imposed on workers.”